Making "Interaction" Work More Productive will be Key to Sustainable Competitive Advantage

The January 2007 McKinsey Quarterly Chart Focus Newsletter (may require registration) in a feature titled Interacting for Competitive Advantage and with reference to a related McKinsey article The Next Revolution in Interactions, shares some interesting statistics and insights about the changing nature of U.S. jobs.

The article (also available as a podcast) identifies three different job types:

• Transformation - jobs whose predominant activity is work which involves extracting raw materials or converting them into finished goods (e.g., Production Operators, Carpenters, Contruction Workers)
• Transactional - jobs whose predominant activity is interactions that unfold in a generally rule-based manner and can thus be scripted or automated (e.g., Cashiers, Accounting, Truck Drivers)
• Tacit - jobs whose predominant activity is more complex interactions requiring a higher level of judgment, involing ambiguity, and drawing on tacit - or experiential - knowledge (e.g., Registered Nurses, General Managers, Salespersons)

The two sources present a number of interesting statistical exhibits which tell us how a shift in the nature of work is occurring, but the essence of the point is this:  Over the past six years, the number of U.S. jobs that are "tacit" in nauture has been growing two and a half-times faster than the number of "transactional" jobs and three times faster than employment in the entire national economy.  "Tacit" jobs now make up 41% of the U.S. labor market.  Not surprisingly, this trend is being experienced in most developed nations around the world.

Raising the performance and productivity of these "tacit" workers will be key to organizational success in the future global economy.  Organizations that figure out how to do this and manage to institutionalize the practices will have the competitive advantage.  Or, as the McKinsey authors put it:

...the potential gains to be realized by making these employees more effective at what they do and by helping them to do it more cost effectively are huge—as is the downside of ignoring this trend.

It seems clear to me that well-designed, well-executed reward and performance management systems targeted at "raising the bar" for "tacit" work will, in the authors' words:

...create capabilities and advantages that rivals can't easily duplicate.